2012 Tax Session Students Financial Services - Payroll University - - PowerPoint PPT Presentation

2012 Tax Session

Students

Financial Services - Payroll University of Chicago April 4, 2013

Taxes: How it works

• Salary/Wages
• Compensation
• Scholarship Stipend
• Fellowship
• Independent Wages

Income

• Withheld from

payments

• Estimated tax

payments

Tax Payments

• File a yearend tax

return to reconcile the total (annual) income earned and the taxes already paid

Tax Return

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Steps to Tax Filing

1.) Do I have a filing requirement for 2012? 2.) What is my tax residency status? 3.) What type of income did I have (if any?) 4.) What tax forms should I receive? 5.) What tax forms do I file? 6.) How do I complete the tax forms? 7.) How do I get assistance? http://internationalaffairs.uchicago.edu/page/tax-responsibilities

Do I Have a Filing Requirement?

• If you were physically

present in the U.S. (any status but Tourist) in 2012 (for any length of time), you do have a filing requirement.

YES

• If you were NOT

physically present in the U.S. in 2012, you have NO filing requirement.

NO

TAX RESIDENCY

RESIDENT VERSUS NONRESIDENT

Determining Tax Residency

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Tax Residency is determined by the Substantial Presence Test (SPT). Count days of physical presence in the US. To “count” your days you use this calculation: Current Year x 1 ________ 1st Previous Year x 1/3 ________ 2nd Previous Year x 1/6 ________ If total equals 183 days or more = Resident for Tax. If total equals 182 days or less = Nonresident for Tax.

Determining Tax Residency

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EXCEPTIONS to SPT F or J students receive 5 “exempt” years. Not exempt from tax, but of counting physical days of presence in the U.S. towards SPT. (So, for first 5 years, the SPT total will be “0”). J non-students receive 2 “exempt” years (of the past 6 years). (So, typically for the first 2 years, the SPT will be “0” – unless individual has had previous entries to the U.S. as an F, J, M or Q). “Exempt” years are CALENDAR years, not years from date of arrival.

Determining Tax Residency

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F1 or J1 Students who arrived for the first time in the US in 2008 or after are NONRESIDENT FOR TAX. F1 and J1 Students get 5 “exempt” years in a lifetime. Consider ALL entries to the US. Apply the SPT based on the CURRENT status. SPT looks at current year and past 6 years.

Determining Tax Residency

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EXAMPLE: A student was in the US from 2006-2010 as an F1; left the US; returned 07/01/2012 as an F1. 2012- 184 countable days = Resident for tax 2011- 0 countable days 2010- Exempt Year = NRA 2009- Exempt Year = NRA 2008- Exempt Year = NRA 2007- Exempt Year = NRA 2006- Exempt Year = NRA

Dual Status Individuals/Residency Elections

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• Bona Fide nonresident and resident in the same year.
• May file a special tax return called a Dual Status Return described in

Publication 519.

• A dual status alien married to a U.S. citizen or to a resident alien

may elect to file a joint income tax return with his/her U.S. citizen or resident alien spouse. Refer to "Nonresident Spouse Treated as a Resident" in Publication 519, U.S. Tax Guide for Aliens.

• A nonresident married to a U.S. citizen or to a resident alien may

also elect to file a joint tax return with his/her spouse.

Types of Income

Employment/Compensation

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Provided services to the University for payment– paid on a monthly, biweekly or casual basis. The University of Chicago employment taxes:

• Federal – taxes are assessed by the Income Tax Withholding Table
• IL State – 5% (slightly less if claiming allowances)
• FICA/OASDI – 6.20% (4.2% for 2012)
• Medicare – 1.45%

*Nonresidents holding F1 or J1 visa status are exempt from FICA/OASDI and Medicare taxes*

Scholarship/Fellowship Stipends

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Funds given to support education/academic advancement or achievement. The University of Chicago scholarship/fellowship taxes:

• Federal – taxes are withheld at 14% for nonresidents

and 0% for residents. Residents may be required to pay quarterly estimated payments.

• Illinois State – taxes are not withheld at source, but

individuals may be required to pay quarterly estimated payments and/or pay taxes when filing a tax return.

• FICA/OASDI – Not applicable
• Medicare – Not applicable

Independent Contractor

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Similar to Employment, but providing services independently for business under terms of a contract. The University of Chicago independent contractor taxes:

• Federal – taxes are withheld at 30% for nonresidents and 0% for
• residents. Residents may be required to pay quarterly estimated

payments and/or pay taxes when filing a tax return.

• Illinois State – taxes are not withheld at source, but

individuals may be required to pay quarterly estimated payments and/or pay taxes when filing a tax return.

• FICA/OASDI – Not withheld
• Medicare – Not withheld

Tax Forms

What Tax Forms Should I Receive?

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• Wages, Salary, Compensation (Employment earnings)

W2

• Foreign Royalty Payments
• Foreign Scholarship Stipend/Non-Degree Aid
• Foreign Independent Contractor Services
• Tax Treaty Benefits
• Foreign Prize/Award/Miscellaneous foreign payments

1042-S

• Rent
• Royalties
• Other Income
• Medical and Healthcare Provider
• Legal Fee
• Services .
• Settlements

1099- MISC

Tax Forms

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W2 –Mailed to home address on Jan. 22. Reprints of W2 forms = Antonella Wellman w2form@uchicago.edu 1099 – Mailed to home address Jan. 29. Reprints of 1099 forms = Anthony Belarmino abelarmi@uchicago.edu 1042-S – Mailed to home address on February 19. Reprints

• f 1042S forms = Lerone Moore leronemoore@uchicago.edu

*If you worked outside of the University, you will need to contact your employer or payer of the scholarship/fellowship for appropriate tax forms*

Requesting a Duplicate Tax Form

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To request duplicate forms – the request must be in writing (email is fine) and include the following:

• Full Name
• Last 4 digits of SSN
• Date of Birth
• What the request is and year (e.g. 2012 W2)
• Current/Permanent Address
• If the form will be picked up or should be mailed

FEDERAL TAX FILING

2012 De Deadline: : April l 15, 2013 Forms must be post-marked by this date, not received by the IRS

Glacier Tax Prep – For Nonresidents

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• Available through the Office of International Affairs’ website:

https://internationalaffairs.uchicago.edu/page/tax-responsibilities

• Please read all tax information on website before accessing Glacier

Tax Prep and have all necessary paperwork available.

• Glacier Tax Prep Process:
• Create individual log in
• Refund
• Determine U.S. Tax Residency Status
• Check
• Which Tax Form to use
• Direct Deposit
• Tax Treaty
• Read all Instructions
• Director of Academic Program
• Download Forms

Thomas Rosenbaum

• Mail Forms

5801 S. Ellis Ave

• Information about State Filing

Chicago, IL 60637

Nonresidents for Tax

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• Can use Glacier Tax Prep
• Can also file on your own, or use a CPA, VITA or Tax Preparation
• Firm. (Just be sure they file you as a nonresident. Ask about

knowledge of foreign tax matters)

• File using 1040NR or 1040NR-EZ and 8843.
• Do you need to File? http://www.irs.gov/pub/irs-pdf/i1040nre.pdf

“Who Must File”

• OIA Website:

https://internationalaffairs.uchicago.edu/practical/taxes/nonresident .shtml

Nonresidents for Tax – Spouses (J2, F2, H4)

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If spouse is working: Will need to file own federal and state tax return and form 8843. If spouse is not working: Will only file 8843. Since no CNET ID is available, must download the 8843 from www.irs.gov or https://internationalaffairs.uchicago.edu/page/irs-form-8843 and complete by hand. Do not submit this form in the same envelope as spouse.

Applying for an ITIN

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• An ITIN is required for students who receive taxable income but

are ineligible for a SSN, such as stipend recipients that do not have a job (on or off campus).

• During tax season, you will apply for an ITIN along with your taxes
• Make an appointment with OIA to pick up a letter and make copies
• f your passport
• Send your ITIN application to the IRS and include your tax return
• Detailed instructions are on the OIA website

Residents for Tax

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• Cannot use Glacier Tax Prep
• Can use any avenue for filing such as Tax Filing Software;

Certified Public Accountant (CPA); Tax Preparation Firm; IRS Free File, VITA or Yourself

• File using 1040; 1040-EZ; 1040A
• Do you need to file?

http://www.irs.gov/individuals/article/0,,id=96623,00.html

• Can file jointly with a spouse and claim dependents (children)
• As residents for tax, able to claim any

deduction/allowance/benefit available to U.S. Citizens

• OIA Website:

https://internationalaffairs.uchicago.edu/practical/taxes/resident.s html

Residents for Tax

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Claiming a Tax Treaty as a Resident for Tax Resident tax forms do not specifically address claiming tax treaties as residents for tax. However, the IRS recommends the following: A resident for tax must complete form 1040

• Enter ALL wage income on line 7
• On line 21 indicate the amount of tax treaty benefit in

parenthesis (which indicates subtraction)

• On the dotted line 21 indicate the treaty article (e.g. US-

China article 19)

• On line 22 you will subtract the amount from line 21 from

the rest of your income to claim the treaty benefits It is also recommended to either submit a memo stating your visa status, date of entry, expiration date and that you are eligible to claim the treaty benefit; or submit a copy of the treaty.

Residents for Tax

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Claiming a Spouse and/or dependents that do not have an SSN

• r ITIN

1.) Individuals who are not working are not eligible for an SSN, so you must apply for an ITIN. 2.) Complete W7 and attach appropriate documents per instructions for each individual who needs an ITIN 3.) Complete federal tax return 4.) Must mail completed W7 applications and completed 1040 to the W7 address. ITIN applications will be processed first, then the federal tax return will be forwarded for processing. 5.) Processing of tax return will take 8-12 weeks (4-6 for ITINs to be assigned) 6.) For Illinois state tax filing: a.) You wait for the ITINs to be assigned (may need to file an Illinois tax filing extension b.) You do not claim the dependents

ILLINOIS STATE TAX FILING

2012 De Deadline: : April l 15, 2013 Forms must be post-marked by this date, not received by Illinois Revenue

Residents of Illinois

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*Lived and worked only in Illinois*

• Can use any avenue for filing such as Tax Filing Software; Certified

Public Accountant (CPA); Tax Preparation Firm; Illinois State Web File or Yourself

• Start with IL-1040 – Begin the IL-1040 with the adjusted gross

income created on the federal tax return

• Do you need to File? See Illinois State Website for filing

requirements

Part-Year Residents

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*Lived and/or worked in Illinois AND another state*

• A part-year resident taxpayer Must file Form IL-1040 and Schedule NR

if:

• you earned income from any source while you were a

resident,

• you earned income from Illinois sources while you were

not a resident, or you want a refund of any Illinois Income Tax withheld. There is a reciprocal agreement with the following states: Iowa, Kentucky, Michigan, or Wisconsin. If you are an Illinois resident you must file Form IL-1040 and include as Illinois income any compensation you received from an employer in these states. Compensation paid to Illinois residents working in these states is taxed by Illinois. You will not pay tax in the above states. (If you were a legitimate resident of IL and reciprocal state, you will need to file a Schedule NR).

• Use form IL-1040 AND Schedule NR. (Or Schedule CR)

Part-Year Residents

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*Lived and/or worked in Illinois AND another state*

• If you lived/worked in another state (other than Iowa, Kentucky,

Michigan, or Wisconsin) – You need to investigate that state’s filing requirement.

• States without State Tax: Alaska, Florida, Nevada, New

Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming

• There is local tax in some cities/townships/villages.

Nonresident of Illinois

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• A nonresident taxpayer: You were not a resident of Illinois at any

time, but received income from Illinois sources. You must file Form IL-1040 and Schedule NR, if you earned enough taxable income from Illinois sources to have a tax liability or you want a refund of any Illinois Income Tax withheld in error. You must attach a letter

• f explanation from your employer.
• If you were in Illinois and did not have any income from Illinois

sources, you may not have an Illinois filing requirement.

Resources

Final Notes

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• MAKE COPIES OF TAX FORMS!
• Spouses and Children (regardless of age) may need to file a form

8843 if they are in nonresident tax status.

• If you don’t have a SSN or ITIN, must apply for ITIN when filing a

2012 tax return.

• Always read over instructions or ask questions. An incorrect tax

filing can cause future issues with USCIS.

• If you did not appropriately file (or filed in error) for a previous year,

this should be corrected. Download previous year tax forms from the IRS or Illinois state websites.

Resources for Federal Filing

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IRS: www.irs.gov (800) 829-1040 IRS - Chicago Office: 230 S. Dearborn St. Chicago, IL 60604 (312) 566-4912 Monday-Friday - 8:30 a.m.-4:30 p.m. Taxpayer Advocate: (312) 566-3800 or (877) 777-4778

Resources For Illinois State Filing

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Illinois State Revenue Office http://www.revenue.state.il.us/Individuals/index.htm (217) 782-3336 Chicago Office: James R. Thompson Center Concourse Level 100 West Randolph Street Chicago, Illinois 60601-3274 (800) 732-8866 Hours: 8:30 am to 5:00 pm

Resources for University Payroll Questions

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Lerone Moore Alien Tax Analyst leronemoore@uchicago.edu (773) 834-2672 6054 S. Drexel Ave, Suite 300 Chicago IL 60637 Angie Gleghorn Payroll Solutions Manager gleghorn@uchicago.edu (773) 705-5989 6054 S. Drexel Ave, Suite 300 Chicago IL 60637